Looking at the advantages and disadvantages of prefabricated and modular construction presented in previous sections, the driving point that makes these types of construction more economical is the overall speed that can be achieved. This time saved relates directly to overall cost savings because saving time saves money. Therefore, this section will first focus on demonstrating the schedule of prefabricated modular construction and the predicted schedule of this project compared to the Waiea towers schedule. From here, this section will show how the time that is saved is quantified out to savings in overall labor costs and overhead costs that occur over time. It will culminate with the overall savings predicted if the entire Waiea tower was
constructed with a prefabricated modular system in the same fashion that the East tower was in the previous chapter. This will help reinforce and prove this projects point that a prefabricated modular high-rise structure in Honolulu, Hawai‘i will cost less than the conventionally constructed concrete high-rise while also allowing design freedom with customized geometrical forms.
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SCHEDULE
In project management for construction, the schedule is a list of a project’s activities, milestones, and deliverables with a start date and completion date. A schedule informs how the project is planned and managed and can be represented in terms of a timetable with activities and the amount of time allotted for that activity. The savings in time on a prefabricated modular projects schedule comes directly from the ability it has to simultaneously construct in the factory and on- site. This will begin by examining the Waiea towers start and completion date. Then it will theoretically map this in terms of standard construction on top of a timetable to find out what takes place when, and the duration of that activity. From here this section will determine how much time in the overall schedule can be saved by using modular prefabricated construction. After this, the amount of time savings will be subtracted from the Waiea tower and mapped on a timeline in terms of a new prefabricated modular schedule. The savings will be quantified after this with respect to the time savings to give predictions on the monetary savings that will occur.
• Starting with the timeline of the Waiea tower, the construction schedule started in middle of 2014, in June, and ended at the end of 2016 in December. This means that all together the construction schedule was 19 months long.179 Then, by using construction scheduling
guidelines presented in the Atlantic Yards B2 project for a conventional building, activities of the Waiea Tower are assigned to the timeline. It showed that the foundation and excavation take approximately 1/3 of the schedule, the superstructure, interior, and exterior take approximately 2/3 of the schedule, followed by the closeout taking approximately 1/5 of the schedule.180 This is demonstrated in the figure below.
179 Honolulu Star Advisor. 2017. “Tower.” Accessed February 22, 2018.
https://www.pressreader.com/usa/honolulu-star-advertiser/20171122/281956018089195
180 Forest City Ratner, “Building 2 at Atlantic Yards.” Presentation to the public, November 9,
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Figure 13.1 - Predicted construction schedule of Waiea tower.
• Now it will be determined how much time in the overall schedule can be saved by using modular prefabricated construction. According to the Modular Building Institute, because the construction of modular buildings occurs at the same time other activities such as foundation work and conventionally built elements, projects can be completed 30% to 50% faster than traditional construction and is shown in the figure below.181 A case study
looked at earlier in this project, Victoria Hall in Wolverhampton, is a twenty-five story prefabricated modular high rise building that predicted that it reduced the overall
construction period by over 50% relative to site intensive building according to Lawson et al.182 It is also stated by Smith et al., that Amy Marks from Kullman has fabricated a few
of Kieran Timberlakes prefabricated modular projects and on average is seeing a 50% time reduction from their contractors for off-site methods over on site methods for steel and concrete commercial buildings.183 This is also shown in the figure below along with
another schedule comparison below that of a conventional to modular medium sized hotel that explains that by using an eight week lead-in time for ordering the varying
181 Modular Building Institute. n.d. “What is modular construction?” Accessed February 22, 2018.
http://www.modular.org/HtmlPage.aspx?name=why_modular
182 Mark Lawson, Ray Ogden, and Rory Bergin. 2012. “Application of modular construction in
high-rise buildings.” Journal of Architectural Engineering 18, no.2 (June): 148-154.
183 Ryan Smith and James Timberlake. 2010. Prefab Architecture: A Guide to Modular Design
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prefabricated modules, the project time can be reduced by over 50%. Lead time can be extended back another month for prototyping depending on the degree of modularization and customization desired.184 After speaking with Hawai‘i Modular Space and examining
these numbers, this project in Hawai‘i will use the mean percentage of a 40% overall time savings to calculate how much time can be saved for this project. This is to make sure the quantification isn’t over or under estimated.
Figure 13.2 - MBI schedule comparison (conventional to prefabricated modular construction). Modular Building Institute. n.d. “What is modular construction?” Accessed February 22, 2018. http://www.modular.org/HtmlPage.aspx?name=why_modular.
184 R. Lawson, P. Grubb, J. Prewer and P. Trebilcock. 1999. Modular Construction using Light
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Figure 13.3 - Kullman Building Systems comparing similar projects using conventional and prefabricated modular systems in terms of schedule. Smith, Ryan and Timberlake, James. 2010. Prefab Architecture: A Guide to Modular Design and Construction. Hoboken, New Jersey: John Wiley & Sons, Incorporated.
Figure 13.4 - Comparison of conventional to modular construction in a typical medium size hotel. Lawson, R, Grubb, P, Prewer, J, and Trebilcock, P. 1999. Modular Construction
using Light Steel Framing: An Architect’s Guide. Silwood Park, Ascot: The Steel
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• Shown in the figure below is the explanation and equation derived from the above- mentioned facts to find out how much time will be saved and the time of the predicted schedule for this projects prefabricated modular design.
Figure 13.5 - Expected construction schedule time savings from conventional concrete construction to prefabricated modular construction for Waiea in Honolulu, HI.
• Now, the overall time savings will be graphed in order to show how the types of
construction compare graphically. This will show how simultaneous activities in modular construction overlap to create this savings. The first graph will show the conventionally constructed Waiea tower schedule, but with overlapping elements of
foundation/excavation and superstructure/exterior/interior to show that even if the mass customization of the façade attachment components takes the same amount of time as the conventionally constructed customized façade, that it will still save on the overall time. This would represent the minimum amount of time savings. After this, the guidelines presented in the Atlantic Yards B2 project will be applied to this project to show how much time this project is predicted to take if the mass customized elements can be manufactured as the same rate as the base chassis modules. The guidelines state that on-site foundation, plinth, and excavation will take approximately 1/3 of the schedule time, the fabrication of modules will take approximately 1/3 of the schedule time, the module erection will take approximately 1/3 of the schedule time, and the closeout will
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take approximately 1/7 of the time.180 This also includes the two month lead time for the customized components before the site work starts along with another two months of lead time once the site work begins, giving ample time for the customized geometrical formwork to be figured out and produced. This is then applied to this project to enable the comparison.
Figure 13.6 - Comparing the conventionally constructed Waiea tower schedule to the same conventionally constructed Waiea tower with overlapping time qualities seen in prefabricated modular construction (minimum savings).
180
Figure 13.7 - Estimated schedule for this project including lead time.
Figure 13.8 - Comparing construction schedule of conventionally constructed Waiea tower this project’s proposal of a prefabricated modular Waiea tower (maximum savings).
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QUANTIFYING SAVINGS
The three main cost saving factors from using prefabricated modules though comes from material, labor, and time.185 The savings on material and labor though can also fall into the
category of time. The time that is saved from using a prefabricated modular system can be quantified out to savings in many various aspects. This would Examples include overall labor costs that occur per day, overhead costs that occur over time, allowing occupants to move into units at an earlier date generating revenue sooner, and creating less waste to save on material costs. It is stated by Lawson et al., that that the total cost savings because of the speed of construction alone can be from 5% to 10% of the total building cost.186 The prominent cost
savings features from using prefabricated modular construction are shown below (a-e).187 Points
of overhead costs and labor costs will covered next, along with the overall savings predicted by using a prefabricated modular construction system over conventional construction systems.
Cost Savings Factors
a) Reduced interest based on construction loans resulting from the time reduction. b) Buildings can be occupied quicker therefore generating revenue sooner
c) The materials used in the manufacturing of modules (steel) vs conventional building material (concrete), as well as less waste which also has value.
c) Reduced labor costs because time saved means less man hours on site, non-union labor wages in a prefabricated module factory is cheaper than union labor wages on site, and due to increased job safety, there are lower insurance premiums.
e) Reduced overhead costs due to time saving during construction
185 Ryan Smith and James Timberlake. 2010. Prefab Architecture: A Guide to Modular Design
and Construction. Hoboken, New Jersey: John Wiley & Sons, Incorporated.
186 R. Lawson, P. Grubb, J. Prewer and P. Trebilcock. 1999. Modular Construction using Light
Steel Framing: An Architect’s Guide. Silwood Park, Ascot: The Steel Construction Institute.
187 Sri Velamati. 2012. “Feasibility, benefits and challenges of modular construction in high rise
development in the United States: A developer’s perspective.” Thesis, Massachusetts Institute of Technology.
182
Overhead
What will be explained here is the overhead costs and how generating savings here can affect the cost overall. First, overhead costs can be defined as the operating expenses of a building with charges that cannot be attributed exclusively to a single project or service and is a ratio of a firm’s additional cost burden to its bill-able cost. Total overhead costs in the United States usually do not exceed 15% of the annual construction volume, but is a significant amount. The overhead expenses can be categorized into two categories of direct and indirect overhead charges and is shown below.188
• Direct overhead costs are those incurred helping to construct a project. They relate specifically to a project and can be added to the project cost. These comprise the
expenses of managing the project at the site and can be called project overhead costs. A list of various factors is presented below.189
-project’s insurance -financing
-supervision
-temporary construction -equipment rentals and costs -temporary offices
-utilities for the job
• Indirect costs are those incurred by the contractor running the business, but cannot be charged to a specific project. They represent the cost of doing business and fixed expenses that must be paid on a regular basis whether or not the company is
188 Mohammad Humoud Al-Shari. 1997. “Overhead costs in building construction in Saudi
Arabia.” Master thesis, King Fahd University of Petroleum and Minerals.
189 Ryan Smith and James Timberlake. 2010. Prefab Architecture: A Guide to Modular Design
183
constructing something. These can be called company overhead costs. A list of various factors is presented below.190
-head office expenses -head office staff wages
-warehouse, workshops, and camps -automobile expenses
-insurance
-taxes and social security -retirement
-fees
According to Lawson et al., site overhead is reduced to at least a proportion of the overall construction schedule. This means that the typical 15% overhead cost of the build cost associated with conventional construction is expected to be reduced to 7-8% with a predicted time savings of thirty to fifty percent.191 This project is based off of a forty percent schedule
savings, so the median of seven and a half percent will be used as the overhead predicted cost savings. Below is an example showing the predicted savings of the Waiea Tower if the entire tower were constructed with a prefabricated modular system by using these metrics and the current information online that states that the final agreed upon cost of the Waiea Tower was initially 275 million dollars, but later increased to 303 million dollars and then 417 million dollars according to the most recent financial report by Howard Hughes. The 417 million dollars includes market and other non-construction related activities, so for the purpose of this the project the 303 million dollar final price will be used to be on the conservative side.192
190 Ryan Smith and James Timberlake. 2010. Prefab Architecture: A Guide to Modular Design
and Construction. Hoboken, New Jersey: John Wiley & Sons, Incorporated.
191 Mark Lawson, Ray Ogden, and Chris Goodier. 2014. Design in Modular Construction. Boca
Raton, Florida: CRC Press.
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Figure 13.9 - Comparing cost breakdowns of site intensive construction to modular construction. Lawson, Mark, Ogden, Ray, and Goodier, Chris. Design in Modular Construction.
Boca Raton, Florida: CRC Press, 2014.
Figure 13.10 - Overhead cost savings due to time savings by switching from conventional to modular construction.
Labor
The overall savings in time relates directly to monetary savings in reduced labor times. There is also the factor that on-site labor in Hawai‘i or other big cities will be of higher union wages, while
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the off-site factory labor of the modules on the United States West coast smaller cities is of lower non-union wages. This alone is a factor that reduces the overall cost of labor.193 Research titled
Modular Prefabricated Residential construction: Constraints and Opportunities, pointed out that
even if union labor is used, it is still at a cheaper wage in off-site construction. An example is given of the Atlantic Yards B2 project. It states that in this project, a union carpenter on site was charging 85$ an hour, but at the off-site factory where the modules were produced, the wage of the same union carpenter was around 35$ an hour. This shows that even if a union worker was used in an off-site factory to fabricate the modules instead of a non-union worker, the wages will still be significantly cheaper.194
With the conventional method of construction used in the Waiea tower, there needed to be 19 months of labor wages. For the prefabricated modular proposal, there would need to be 11 ½ months of labor wages. This equates out to savings 7 ½ months of labor wages. While the amount of workers on site cannot be quantified, as well as the exact wages of the workers for union and non-union, a formula shown below can demonstrate how this can be quantified to show that there will in fact be economic savings because of this factor.
193 Peter Cameron and Nadia DiCarlo. 2007. “Piecing together modular: Understanding the
benefits and limitations of modular construction methods for multifamily development.” Thesis, Massachusetts Institute of Technology.
194 Naomi Javanifard, Debra Markert, Kristen Strobel, and Jason Yap. 2012. “Modular
Prefabricated Residential construction: Constraints and Opportunities.” Technical Report (Skanska Innovation Grant), University of Washington.
186
Figure 13.11 - Labor savings formula comparing conventional to modular construction.
Overall savings
After looking at some factors of cost savings presented previously, a conclusion can be drawn that the final overall cost of modular construction is cheaper relative to site intensive construction. With so many various factors though it can be hard to quantify the total savings by using
prefabricated modular construction rather than site intensive, but Lawson et at., has created a chart that gives the most accurate approximation. This rule of thumb chart shown below gives the total savings as a proportion of the total building cost by using prefabricated modular construction relative to site intensive. It factors the overhead charges mentioned earlier into the site
preliminaries savings and the labor charges mentioned earlier into the speed of construction savings. The snagging reduction represents savings due to risk reduction and the consultant fees accounts for the design fees.195
195 Mark Lawson, Ray Ogden, and Chris Goodier. 2014. Design in Modular Construction. Boca
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Figure 13.12 - Savings of using modular systems relative to site-intensive construction. Lawson, Mark, Ogden, Ray, and Goodier, Chris. Design in Modular Construction. Boca Raton, Florida: CRC Press, 2014.
This 11% to 19% total cost reduction shown above will be the approximation (rule of thumb) for cost savings in this project because it is stated that this chart is meant to compare similar overall builds of site-intensive to modular construction. Demonstrated below is the predicted and expected amount of overall cost savings in this projects modular version of the entire Waiea tower using the above figure as the reference.
Figure 13.13 - Estimated total cost savings in this project by using prefabricated modular construction in the Waiea tower instead of conventional on site construction.
Thus, the overall cost savings by using prefabricated modular systems versus site intensive systems for this project is estimated to be in the range from a minimum of $33,330,000 to a